Under-market Rental in Denver problem

[Ben Kappel]

So I have a rental property in the Berkeley area of Denver, townhouse in a row of four, 2-bed, 1.5 bath. I have a very reputable management company take care of it, but today I saw an end unit listed for $1800/month while mine is in a lease for $1425.  Exact same layout and size tho this other unit does have a nicer/updated kitchen and bathrooms.   Mine has been leased for 3 years to the same tenant (good tenant) (middle of winter lease so maybe it had to start lower?) and increases at 3% yearly.   Now that the lease is set up in the beginning of summer, do I demand a much higher rent increase to bring it up to market? The management company always seems against this when I bring it up. Does Colorado/Denver have and legal maximum yearly rent increase %?   Does a nicer kitchen and bathrooms deserve that much more in rent where I should update it to get prime rent?  

[James Carlson]

@Ben Kappel

I used my Denver MLS access to track down the location of your townhome. And then I found the listing you're talking about on Zillow. (Excuse the private investigator creep factor.)

A couple thoughts on this: 

1. Requested rental price is not the same as what the landlord will actually get. Looks like they initially listed the unit more than a month ago at $1,900. Then they dropped it to $1,800 six days ago and still haven't gotten anyone. 

I call this the "let's see" model of pricing, and I see this in Denver on the buy and sell side of things all the time. "Let's just see if we can get this much." It could end up being that you are closer to the market rent than they are. That said ... 

2. I'd still reach out to some other Denver area property managers. Some of the resources I use for estimating rents say a 2br in your area should get somewhere between $1600-$1700/mo. (That's average of course and depends on the condition of your place.)

3. A good tenant could be worth $100 or $200 depending on how good they are and how much work you actually want to do.

Good luck!